EU Directive on Unfair Trading Practices in B2B in the Agricultural Food Supply Chain

On 9 April the EU Council formally approved the directive and the legislative act was signed on 17 April 2019.  EU member states will have 24 months to introduce the new rules into national legislation. This will therefore be the next big stage in policing the agricultural and food supply chain; even if Brexit takes place this year then all trade with the EU will be ultimately governed by this for agricultural and food producers.

The Directive 2019/633  highlights the that whilst risk is inherent in all economic activity, agricultural production is particularly fraught with uncertainty due to its reliance on biological processes and that differences in bargaining power means a minimum standard of protection against certain manifestly unfair trading practices should be introduced.  

It was agreed that Unfair Trading Practices (UTPs) occur throughout the food supply chain with smaller operators more vulnerable to these practices due to weaker bargaining power compared to larger operators. The Directive distinguishes between two types of trading practices. Those that may be unfair in nature, but may be acceptable if clearly agreed by the parties, and become unfair only when applied without agreement such as: late payment for perishable foods; short notice cancellation of orders of perishable foods, unilaterally and retroactively changing the terms of the supply agreement and having a supplier pay for the wastage of food products on the buyer’s premises not caused by the negligence or fault of the supplier.  Further additional trading practices would be prohibited unless agreed in clear and unambiguous terms in the supply agreement; such as, returning unsold food products to the supplier, charging the supplier for stocking, displaying or listing their products by the buyer, charging the supplier for the promotion of products sold by the buyer and charging the supplier for the marketing of products by the buyer.

A directive rather than a regulation provides some discretion for member states whilst providing an EU wide framework.  

Member states would be obliged to designate a public authority charged with enforcing the rules. This body would be able to conduct investigations and impose fines in case of proven infringements. The enforcement authorities of member states would have to cooperate with each other and the Commission would facilitate this cooperation and manage a website for the exchange of information. The Directive allows individual Member States to introduce stricter rules designed to combat unfair trading practices than those laid down in the Directive to ensure a higher level of protection.

By Jessica Burt

https://www.food-law-blog.co.uk/2019/06/what-next-for-the-agricultural-food-supply-chain-update-on-grocery-code-adjudicator-and-the-eu-direc.html

CI BEVIAMO UNO “YOGA”?

La decisione del 02/04/2019 (resa nel procedimento di opposizione n. B 2 994 823) ha riconosciuto che il marchio YOGA gode di notorietà nella Comunità Europea per “succhi di frutta”.

Che il marchio YOGA, nato in Italia intorno agli anni 50 e da allora utilizzato intensamente ed ininterrottamente, fosse un marchio noto, lo sapevamo tutti, quindi niente di nuovo sotto il sole…

….o no?

Purtroppo non è per niente automatico che certe situazioni di fatto siano riconosciute giuridicamente.

Perché questo accada, occorre che vi sia un conflitto e che questo conflitto sfoci in una decisione o in una sentenza di un organo amministrativo o giurisdizionale. Spesso (oggi, almeno in questo settore, sempre di più) i conflitti vengono risolti in sede stragiudiziale (a seguito di diffide o alcune volte con accordi di coesistenza) ed è sempre più raro che si abbia l’occasione di portare un giudice ad emettere un provvedimento.

Se poi consideriamo che l’Ufficio Europeo (che ha emesso la decisione in questione) fa un’applicazione molto rigida del principio di “economia procedimentale”, portare lo stesso a pronunciarsi su di un argomento che implica un dispendio procedimentale notevole, è cosa particolarmente ardua….eppure ci siamo riusciti!

Partiamo dall’economia procedimentale: il primo ostacolo per giungere ad una pronuncia di questo genere.

Questo principio fa sì che l’EUIPO possa giudicare un’opposizione sulla base del “motivo giuridico più efficace” ossia, per riportare quanto prevedono le linee giuda dell’EUIPO stesso, “l’impedimento che offre all’Ufficio il modo più semplice per respingere la registrazione della domanda”.

Il principale motivo di conflitto tra marchi è dato dalla somiglianza tra gli stessi e dalla identità o affinità dei loro prodotti o servizi: la domanda di marchio viene respinta quanto tale situazione è idonea a fare sì che il consumatore dei medesimi possa confondere un marchio con l’altro. Si parla di “rischio di confusione”.

Il rischio di confusione è un motivo facilmente accertabile, in quanto per verificare la sussistenza dello stesso l’EUIPO applica principi giuridici e non deve (in linea di massima) analizzare documentazioni di fatto.

La notorietà del marchio è invece un motivo di opposizione che richiede accertamenti di fatto copiosi ed un’analisi delle motivazioni che li supportano molto più articolata.

La notorietà ha anche presupposti diversi.

Occorre sì che i marchi in conflitto siano identici o simili.

Non occorre però che i prodotti siano identici o affini, in quanto, se il marchio viene riconosciuto come notorio, avrà la possibilità di contrastare anche prodotti o servizi “non simili” a quelli dallo stesso rivendicato.

Inoltre, il rischio che il consumatore confonda i marchi in conflitto, non è un requisito che rileva nel caso si voglia azionare la notorietà. Ciò che rileva è invece che, delle due l’una, o il titolare del marchio posteriore tragga indebito vantaggio dalla notorietà del marchio anteriore, oppure che la presenza del marchio posteriore arrechi pregiudizio alla notorietà del marchio noto.

Tutto questo implica che ogniqualvolta venga azionato come motivo di opposizione il rischio di confusione, l’EUIPO farà il possibile per risolvere la controversia limitandosi all’analisi di quest’ultimo (semplicemente perché più facile da accertare), non analizzando le motivazioni sottese alla notorietà.

Conseguentemente non è assolutamente facile “costringere” l’Ufficio a pronunciarsi sulla notorietà: bisogna che “capiti” una controversia nella quale sia strategicamente conveniente azionare solo la stessa, prescindendo dal motivo più facile e lineare che è il rischio di confusione.

Conserve Italia era da tempo appostata in attesa della preda da aggredire e quando è passata, non si è fatta perdere la (ardua e difficile, ma coraggiosa) occasione di “azzannarla” con la notorietà.

La preda era un marchio YOGA depositato per “birre”.

L’indebito vantaggio era costituito dal fatto che il titolare della domanda di marchio potesse approfittare degli investimenti fatti da Conserve Italia, per quasi 70 anni, per promuovere il marchio YOGA.

Il pregiudizio era dato dal fatto che una bevanda alcolica come la “birra” venisse affiancata ad un succo di frutta per il quale Conserve Italia aveva da sempre fatto campagne promozionali salutistiche (principalmente nel campo dello sport) oltre che destinate ai bambini.

L’avere confidato sul fatto che il proprio marchio godesse di notorietà, e quindi evitando di percorrere la strada più lineare e semplice del rischio di confusione, ha permesso a Conserve Italia di ottenere il tanto ambito trofeo: marchio YOGA riconosciuto notorio, non solo in Italia, ma in tutta la Comunità Europea!

Autore: Claudio Balboni 

Articolo pubblicato in Bugnion News n.34 (Maggio 2019)

Registering Chinese translations or transliterations of foreign trademarks

Introduction

As Chinese (Mandarin) is Taiwan's national language, many foreign companies use Chinese translations or transliterations of their foreign brands (trademarks) in order to expand into the Taiwanese market and allow consumers in Taiwan to identify their products more easily.

However, as Chinese characters can have different pronunciations and meanings, there are often multiple ways of translating or transliterating foreign trademarks into Chinese.

Similarity may not exist when comparing a foreign trademark with its Chinese translated or transliterated version using the traditional standard of trademark similarity. As such, when Chinese translated or transliterated versions of foreign trademarks are applied for or registered in bad faith, it is unclear whether there is a likelihood of confusion according to current practice in Taiwan.

The Intellectual Property Court recently addressed this issue in an administrative case relating to a trademark opposition.

Facts

The opponent of the disputed trademark registration was a French cosmetics company, while the registrant was the cosmetics company's distributor in Taiwan.

The cosmetics company determined a Chinese translation of its foreign trademark and ordered the distributor not to use any other trademark or IP right relating to that mark. However, the distributor did not use this Chinese translation.

The distributor claimed that, due to a marketing need, it had created its own Chinese translation of the foreign trademark and had used the cosmetics company's Chinese translation only during the distribution period.

The cosmetics company sought to end its distribution relationship with the distributor and discovered that the distributor had registered its own Chinese version of the foreign trademark (the disputed trademark).

The distributor argued that:

• the disputed trademark had been an independent creation;
• the Chinese translation of the cosmetics company's foreign trademark was pronounced differently to the Chinese translation used in the disputed trademark; and
• no similarity existed between the disputed trademark and the cosmetics company's foreign trademark.

Decision

The Intellectual Property Court highlighted the fact that the distributor and its related company had continually used the disputed trademark and the cosmetics company's foreign trademark. Further, the distributor had regularly added the word 'French' to the disputed trademark to represent the cosmetics company's product.

The court also learned that the distributor had filed and used the cosmetics company's Chinese translation in its registration for the disputed trademark.

In view of these findings, the court declared that the distributor had wilfully attempted to confuse consumers in Taiwan and registered the disputed trademark in bad faith. Therefore, the disputed trademark could not be protected under the Trademark Act.

Comment

This decision clarifies that where a registrant applies to register a Chinese translated or transliterated version of a foreign trademark despite having knowledge of a likelihood of confusion, the application will be considered to have been filed in bad faith and will be deemed invalid.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. 

USA - APHIS Proposes Revised Regulatory Framework Regarding The Movement Of Certain Genetically Engineered

By Lynn L. Bergeson

The U.S. Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) issued a proposed rule on June 6, 2019, on the movement of certain genetically engineered (GE) organisms.  84 Fed. Reg. 26514.  The proposed rule would revise the regulations regarding the movement, including the importation, interstate movement, and environmental release of certain GE organisms in response to advances in genetic engineering and APHIS’ understanding of the plant pest risk posed by them, “thereby reducing regulatory burden for developers of organisms that are unlikely to pose plant pest risks.”  APHIS notes that the proposed rule “would mark the first comprehensive revision of the regulations since they were established in 1987.”  It would provide “a clear, predictable, and efficient regulatory pathway for innovators, facilitating the development of new and novel [GE] organisms that are unlikely to pose plant pest risks.”  Comments on the proposed rule are due by August 5, 2019. For further details, see the Bergeson & Campbell, P.C. (B&C) memorandum here

Canada: Proposed amendments to Food and Drug Regulations

Introduction

On 30 March 2019 Health Canada released its proposed Regulations Amending the Food and Drug Regulations (Improving Access to Generics). Comments may be submitted until 8 June 2019.

The proposed regulations clarify and codify Health Canada's expectations and policies regarding differences in the form of medicinal ingredients in generic drug products that are eligible for submission under the abbreviated new drug submission (ANDS) pathway by introducing a regulatory definition for 'therapeutically active component'. Most significantly, generic drugs which have a different salt form from the medicinal ingredient in the Canadian reference product are eligible for submission as an ANDS under the proposed regulations. Further, the proposed regulations streamline identifying and labelling practices relating to the medicinal ingredient content in drug products and amend the definition of 'innovative drug' in the data protection provisions of the Food and Drug Regulations.

The proposed regulations follow Health Canada's 2017 consultations regarding generic equivalence. In 2017 Health Canada separately issued an Updated Notice: Interim Policy on Health Canada's Interpretation of Medicinal Ingredient and Assessment of Identical Medicinal Ingredient (for further details please see "Updates from Health Canada").(1)

ANDS submission pathway

Under the current Food and Drugs Regulations, to be eligible for assessment under the ANDS pathway, a generic drug product must be the pharmaceutical equivalent of the Canadian reference product (CRP). 'Pharmaceutical equivalent' is defined as follows:

a new drug that, in comparison with another drug, contains identical amounts of the identical medicinal ingredients, in comparable dosage forms, but that does not necessarily contain the same non-medicinal ingredients.

Non-biologics Under the proposed regulations, generic drug products, excluding radiopharmaceuticals and biologics, may be the subject of an ANDS if the new drug has identical amounts of identical therapeutically active components instead of identical medicinal ingredients like the CRP.

'Therapeutically active component' is defined as "a medicinal ingredient, excluding those appended portions, if any, that cause the medicinal ingredient to be a salt, hydrate or solvate".

Generic drug products with the following differences in the medicinal ingredient can be filed through the ANDS pathway:

• different hydrated or solvated forms;
• different polymorphic forms; and
• different salt forms.

Generic drug products with the following differences in the medicinal ingredient cannot be filed through the ANDS pathway:

• different complexes;
• different clathrates;
• different esters; and
• different isomers or mixtures with different proportions of isomers.

According to the Regulatory Impact Analysis Statement accompanying the proposed regulations, complexes, clathrates and esters were excluded from the definition because they do not dissociate to yield identical therapeutically active components in solution. Isomers were also excluded as they can have different pharmacological activities.

The proposed regulations specify that a reference to a new drug's 'medicinal ingredient' is a reference to the form of the medicinal ingredient in the dosage form of the new drug as determined by the minister, considering the manufacturing method and the controls used in the manufacture of the dosage form. In contrast to Health Canada's prior policies, the medicinal ingredient may not be the form of the medicinal ingredient used as the raw material input to manufacture the dosage form.

If there are reasonable grounds to believe that there is a difference between the medicinal ingredient in the generic drug and the CRP, the minister can request the generic drug manufacturer to provide information that demonstrates that any differences are inconsequential to the safety and effectiveness of the new drug.

Further, where there is a difference between the medicinal ingredients of the generic drug and the CRP, the notice of compliance for the generic drug will state any differences from the CRP.

Biologics The proposed amendments specify that the ANDS pathway is unavailable to drugs included in Schedule D to the Food and Drugs Act, commonly known as 'biologics'. However, the Regulatory Impact Analysis Statement states that:

the proposed amendments would not prevent a manufacturer from filing an ANDS for a drug that is not referred to in Schedule D (e.g. a chemically synthesized drug), where the CRP is a drug referred to in Schedule D.

Radiopharmaceuticals The existing definition of 'pharmaceutical equivalent' will continue to apply to radiopharmaceuticals (Schedule C drugs).

Labelling medicinal ingredients and therapeutically active components

As proposed, the labelling requirements will be updated to require a list of both the medicinal ingredient's name and a quantitative list of the therapeutically active components on drug labels where the drug product's medicinal ingredient, as determined by the minister, is different from the therapeutically active component.

The labelling requirements would apply to all new drugs authorised pursuant to Division 8 of the Food and Drug Regulations, not just generic drug products. According to the Regulatory Impact Analysis Statement, this will create a consistent practice for the expression of strength.

Data protection

It has been proposed that the definition of 'innovative drug' be amended to align the variations terminology (ie, the kinds of variation of a previously approved medicinal ingredient that precludes the grant of data protection) with the new definition of 'therapeutically active component, while maintaining the variations referred to in the original 2006 definition of 'innovative drug'.

The current version of Section C.08.004.1(1) defines 'innovative drug' as:

a drug that contains a medicinal ingredient not previously approved in a drug by the Minister and that is not a variation of a previously approved medicinal ingredient such as a salt, ester, enantiomer, solvate or polymorph.

The proposed version of Section C.08.004.1(1) defines 'innovative drug' as follows:

a drug that contains a medicinal ingredient not previously approved in a drug by the Minister and that is not a variation of a previously approved medicinal ingredient...

variation includes, for the purposes of the definition innovative drug,

(a) an enantiomer or a mixture of enantiomers;

(b) a polymorph;

(c) a medicinal ingredient that, when compared to a previously approved medicinal ingredient, is identical, excluding those appended portions, if any, that cause either medicinal ingredient to be a salt, ester, hydrate, or solvate; or

(d) any combination of the variations found in paragraphs (a) to (c).

Therefore, the proposed amendments specify that variations include a "mixture of enantiomers" and "any combination of the variations found in paragraphs (a) to (c)".

Transitional provisions

The proposed regulations will apply only to drug submissions filed after the regulations come into force (ie, 90 days after the day on which they are registered).

Related Health Canada draft guidance documents

Health Canada is also holding a consultation on two related draft guidance documents:

• Draft Guidance Document: Generic Drug Equivalence: Medicinal Ingredients; and
• Draft Guidance Document: Identifying and Labelling Medicinal Ingredients in New Drug Products.

The consultation period will be open until 17 June 2019.

Endnotes

(1) An unofficial consolidated version of the relevant Food and Drug Regulations sections which incorporates the proposed amendments is available here.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.

To view all formatting for this article (eg, tables, footnotes), please access the original here.

Smart & Biggar/Fetherstonhaugh - Urszula Wojtyra

FRANCE: Ordonnance du 24 avril 2019 : ce qui change en matière de « transparence dans la relation commerciale »

PUBLIÉ DANS DROIT COMMERCIAL ET ÉCONOMIQUE

L’ordonnance n° 2019-359 du 24 avril 2019 (JO du 25 avril), refond entièrement le Titre IV du Livre IV du Code de commerce relatif à la transparence, aux pratiques restrictives de concurrence et aux autres pratiques prohibées.

Nous traitons ici du Chapitre 1 relatif à la transparence dans les relations commerciales, à savoir, les CGV, la convention unique, les factures et délais de paiement. Ce chapitre 1 est divisé en plusieurs sections et sous sections.

LES CONDITIONS GÉNÉRALES DE VENTE (Section 1)

L’ordonnance crée un nouvel article L.441-1 du Code de commerce organisé en quatre parties distinctes :

1.     Le contenu des CGV, comprenant les conditions de règlement ainsi que les éléments de détermination du prix, et notamment le barème des prix unitaires et les éventuelles réductions de prix. Lorsque le prix d’un service ne peut être déterminé a priori, le prestataire de services est tenu de communiquer la méthode de calcul du prix ou un devis ;

2.     L’obligation de communication des CGV (sur un support durable) à tout acheteur qui en fait la demande. Les conditions générales de vente peuvent être différenciées selon les catégories d’acheteurs de produits ou de prestations de services ;

3.     Le rôle des CGV, qui comme par le passé, doivent constituer « le socle unique de la négociation commerciale » ;

4.     La sanction du défaut de communication des CGV par une amende administrative (et non plus civile) ne pouvant excéder 15 000€ pour une personne physique et 75 000€ pour une personne morale, prononcée par la DGCCRF.

LA NÉGOCIATION ET LA FORMALISATION DE LA RELATION COMMERCIALE (Section 2)

Conventions écrites (Sous-section 1)

La nouvelle ordonnance réorganise et modifie les dispositions relatives à la convention unique avec les nouveaux articles L.441-3 et suivants du Code de commerce.

L’article L.441-3 fixe les règles générales s’appliquant (hors produits agricoles et denrées alimentaires) à tout distributeur, qu’il soit grossiste ou détaillant :

·         Pour l’essentiel les principes restent inchangés, notamment concernant la durée de tels contrats ou le fait qu’ils doivent être conclus soit avant le 1er mars, soit dans les 2 mois d’un cycle de commercialisation. En revanche, les CGV n’ont à être communiquées que dans un délai raisonnable avant ces dates.

·         Les avenants au contrat devront être faits par écrit, ce qui doit permettre de s’assurer que ces derniers ne remettent pas en cause l’économie générale du contrat.

·         En ce qui concerne les prix : (i) la convention peut dorénavant prévoir les modalités selon lesquelles des conditions dérogatoires de l’opération de vente sont applicables, (ii) les services de « coopération commerciale » entrent également dans la détermination du prix et (iii) il n’est plus fait mention de la date d’effet des prix comme c’était le cas dans la relation avec les détaillants.

·         Lorsqu’elle est conclue pour une durée de deux ou trois ans, la convention fixe les modalités selon lesquelles le prix convenu est révisé. Ces modalités peuvent prévoir la prise en compte d’un ou de plusieurs indicateurs disponibles reflétant l’évolution du prix des facteurs de production.

Des dispositions supplémentaires figurant au nouvel article L.441-4 s’appliquent aux relations avec les détaillants lorsque la convention porte sur des « produits non durables à forte fréquence et récurrence de consommation » (dont la liste sera fixée par décret) :

·         Le Code définit le terme de grossiste, auquel ce régime ne s’applique pas.

·         Le barème de prix n’a pas besoin d’être joint à la convention, si celle-ci précise les modalités de consultation du barème ayant servi de base à la négociation.

·         Les conventions devront fixer le chiffre d’affaires prévisionnel annuel et, le cas échéant, ses modalités de révision. Il constitue, avec l’ensemble des autres obligations fixées par la convention, le « plan d’affaires ».

·         La date d’entrée en vigueur de chacune des obligations prévue pour les différents services du distributeur est « concomitante à la date d’effet du prix convenu », ce dernier s’appliquant au plus tard le 1^er Les dispositions relatives aux conditions dérogatoires de l’opération de vente (visées ci-dessus) ne sont pas applicables.

·         Le fournisseur communique ses CGV au distributeur au plus tard trois mois avant le 1^er mars ou deux mois avant le point de départ de la période de commercialisation. Le distributeur dispose d’un délai raisonnable à compter de leur réception pour notifier par écrit les motifs de refus de ces dernières ou, le cas échéant, les points qu’il souhaite négocier.

·         La règle sur les mandats relatifs aux avantages accordés aux consommateurs ou nouveaux instruments promotionnels (NIP) s’applique dans ce cadre. Comme par le passé, une limitation dans leur montant s’applique à certains produits agricoles.

Les conventions entre fournisseur et distributeur portant sur des produits alimentaires sous marque blanche (ou marque distributeur) doivent, selon le nouvel article L.441-7, mentionner le prix ou les critères et modalités de détermination du prix d’achat des produits agricoles entrant dans la composition de ces produits alimentaires.

Pour rappel, le Code de commerce impose aussi des obligations relatives aux conventions pour la conception et la production de produits manufacturés fabriqués à la demande de l’acheteur en vue d’être intégrés dans sa propre production, qui figurent dorénavant à l’article L.441-5.

La sanction du non-respect des dispositions sur les conventions (à l’exception de celles portant sur des produits alimentaires sous marque blanche) est une amende administrative (et non plus civile) ne pouvant excéder 75 000 € pour une personne physique et 375 000 € pour une personne morale, prononcée par la DGCCRF. Le maximum de l’amende encourue est porté à 150 000 € pour une personne physique et 750 000 € pour une personne morale en cas de réitération du manquement dans un délai de deux ans à compter de la date à laquelle la première décision de sanction est devenue définitive.

Clause de renégociation (Sous-section 2)

L’article L.441-8 sur la renégociation dans les contrats d’une durée d’exécution supérieure à trois mois portant sur la vente des produits agricoles et alimentaires figurant sur une liste fixée par décret, reste inchangé.

LA FACTURATION ET LES DÉLAIS DE PAIEMENT  (Section 3)

Facturation (Sous-section 1)

L’ordonnance du 24 avril 2019 procède à une harmonisation et une clarification des règles de facturation par le biais du nouvel article L.441-9 du Code de commerce :

·         Pour la date d’émission de la facture, il est fait référence au Code général des impôts, selon lequel la facture est émise «dès la réalisation de la livraison ou de la prestation de services » (article 289 I. 3° du CGI). Selon l’article 256 II. 1° du même code, « est considéré comme livraison d’un bien, le transfert du pouvoir de disposer d’un bien corporel comme un propriétaire ».

·         Le Code précise l’intégralité des mentions obligatoires d’une facture et en ajoute deux : l’adresse de facturation de l’acheteur et du vendeur lorsqu’elle est différente de leur adresse ainsi que le numéro de bon de commande s’il a été préalablement établi par l’acheteur.

·         Transformation de la sanction pénale en sanction administrative: l’amende reste à 75 000 € pour les personnes physiques et passe à 375 000 € pour les personnes morales. Le montant maximum encouru est doublé en cas de réitération du manquement dans un délai de 2 ans à compter de la date à laquelle la première décision de sanction est devenue définitive. Elle est prononcée par la DGCCRF.

Délais de paiement (Sous-section 2)

Les dispositions sur les délais de paiement et intérêts de retard figurent désormais aux articles L.441‑10 à L.441-16, y compris la nouvelle procédure de rescrit en matière de délais de paiement créée par la loi du 10 août 2018 dite « Loi Essoc » (article L.441-15). La sanction reste inchangée.

Contact : stephanie.faber@squirepb.com

Case Summary (Canada): The obligations of a liquor establishment to its patrons– an appeal from the decision of the Ontario Licence Appeal Tribunal

The Registrar appealed a decision of the Ontario Licence Appeal Tribunal, which directed it not to suspend the liquor licence of an establishment. In making its decision, the court concluded that a liquor establishment, under section 45 of the applicable regulation, did not have an obligation to ensure that patrons arrive home safely or to ensure that they safely depart their premises.

Administrative law – Decisions reviewed – License Appeal Tribunal – Compliance with legislation – Judicial review – Appeals – Standard of review – Reasonableness

Ontario (Registrar, Alcohol, Gaming and Racing) v. 1146587 Ontario Ltd. (c.o.b. The Royal Oak), [2019] O.J. No. 1336, 2019 ONSC 1469, Ontario Superior Court of Justice, March 18, 2019, K.E. Swinton, G.M. Mulligan and R.M. Raikes JJ.

The Registrar, Alcohol, Gaming and Racing (the “Registrar”) appealed a decision of the Ontario Licence Appeal Tribunal (the “Tribunal”), which directed the Registrar not to suspend the liquor licence of the respondent, The Royal Oak. The basis for the proposed suspension was the allegation that The Royal Oak had violated section 45(1) of the O. Reg 719/90 made under the Liquor Licence Act, R.S.O. 1990, c. L.19. That section states that a licence holder shall not:

… permit drunkenness, unlawful gambling or riotous, quarrelsome, violent or disorderly conduct to occur on the premises or in the adjacent washrooms, liquor and food preparation areas and storage areas under the exclave control of the licence holder.

The incident occurred on December 11, 2016. A regular patron of the bar was served four 24-ounce beers. By the fourth beer, the server noticed the individual was showing signs of intoxication so took away the beer. The patron resisted. He left the bar approximately 15 to 20 minutes later. Staff helped him put on his coat and watched him leave. When he left, he was still showing signs of intoxication (stumbling). The patron was reported missing a few days later. Tragically, his body was found a few days later covered in snow on a well-used path near the bar.

The central issue before the court was whether section 45(1) of the Regulation imposed an obligation on The Royal Oak to ensure that the patron arrived home safely or at least reached a safe place. The Registrar argued that there was an ongoing responsibility on liquor establishments to ensure the safety of patrons after they depart the premises. The Royal Oak argued that such an interpretation was too broad, imposed an impossible burden on liquor establishments and was otherwise not supported in the case law that has interpreted section 45(1) of the Regulation. The court agreed.

The court held that there were two obligations imposed on a licence holder under section 45(1): the licence holder must not permit drunkenness in the premises and it must safely remove a drunken patron within a reasonable period time. The court, however, disagreed that this latter obligation required the licence holder to ensure that the patron arrives home safely or at least reaches a safe place, as the Registrar argued. The court said such an interpretation was not supported by the language of the Regulation, in the case law and would impose an unreasonable burden on the licence holder that it could unlikely ever satisfy. The court stated that section 45(1) is regulatory in nature and that if the legislature had wanted the provision to be remedial – which it suggested the Registrar was promoting through its broad interpretation – it would have used clear and express language, which it did not.

The court dismissed the appeal and awarded costs to the respondent.

This case was digested by Adam R. Way, and first published in the LexisNexis® Harper Grey Administrative Law Netletter and the Harper Grey Administrative Law Newsletter. If you would like to discuss this case further, please contact Adam R. Way at away@harpergrey.com.

away@harpergrey.com